World Energy Outlook 2007

prices to all consuming countries might be driven higher (USCESRC, 2006).
However, it may be that China’s and India’s overseas investments will actually
improve global energy security by bringing to market oil that might not
otherwise have been developed and thereby augmenting global oil supplies
(Andrews-Speed, 2006; Douglas et al., 2006; Rosen and Houser, 2007). At a
time of growing worries about the adequacy of investment in oil-production
capacity, it is clearly of benefit to other consuming countries that China and
India are investing in bringing more oil to market – so long as it does not
crowd out investment elsewhere.
Whatever the overall impact on the world’s energy security of China’s and
India’s increasingly assertive policies in the area of energy diplomacy, partly
aimed at securing equity oil, they will undoubtedly have broad ramifications
for international relations. The real risk is not so much commercial
competition for scarce hydrocarbon resources, as that upstream developments
get caught up in broader foreign-policy issues. This makes it all the more
important for all consuming countries, including China and India, to work
together to enhance their collective energy security in a mutually beneficial way
(see Chapter 6).
190 World Energy Outlook 2007 - GLOBAL ENERGY PROSPECTS: IMPACT OF DEVELOPMENTS IN CHINA & INDIA